The shilling was on the back foot yesterday versus the greenback on account of augmented dollar demand.
Activity in the local currency market picked up, with dollar appetite from importers dominant against fickle foreign currency inflows, to leave the local currency weaker compared to previous close. Ahead of the weekend, we expect shilling’s woes to continue if the recently witnessed uptick in appetite for the buck persists.
This might however be pared should there be an upturn in foreign currency inflows and tightening liquidity later in the day due to tax payments.
Dollar jumps, shrugs off data pointing to slowing domestic economy
The U.S. dollar jumped, shrugging off data pointing to a slowing domestic economy. Growth slowed to an annualized rate of 2.2% in the last three months of the year, less than the 2.6% originally reported.
The jobless claims news helped take 10-year Treasury yields back up to around 2.40%, well off their overnight low of 2.35%. Higher yields make dollar-denominated assets more attractive, supporting demand for the currency.
The pound, meanwhile, slumped in the wake of the U.K. parliament’s failure to pass any bills that were alternatives to Prime Minister Theresa May’s Brexit agreement. May is still hoping to bring back her Withdrawal Agreement for a third vote today, and has promised to resign if her deal passes, to allow a more committed Brexiteer to oversee talks on the U.K.’s future trade relationship with the EU.
GBP/USD was down to 1.3074. The euro hit a two-week low of $1.1215 on hints of further stimulus from the European Central Bank, before recovering to $1.1228.